New Issue Brief: Increased Use of Biosimilars Could Bring Billions in Savings for Patients, Providers, Taxpayers

New Issue Brief: Increased Use of Biosimilars Could Bring Billions in Savings for Patients, Providers, Taxpayers

Biosimilars have the potential to realize billions in savings for the health care system if reforms are enacted to incent their market share to grow, according to a new issue brief issued today by the Center for Medical Economics and Innovation at the California-based, free-market think tank, the Pacific Research Institute.

“Biosimilars are innovative medications that can treat patients at lower costs,” said Dr. Wayne Winegarden, director of PRI’s Center for Medical Economics and Innovation and author of the issue brief.  “Our research shows that as their market share increases, biosimilars can lead to billions in savings for patients, health providers, and taxpayers – while also helping to treat some very serious illnesses.”

Click here to download a copy of the new PRI issue brief.

Biosimilars are biologic drugs that are similar to an originator biologic medication or treatment but has no meaningful difference in terms of safety or effectiveness.  This differentiates biosimilars from generic medications, which are chemically identical versions of a branded medication.

The process to create biosimilars is also more complex than the process to create generics, therefore the savings potential is less than with generics. Nonetheless, biosimilars have the potential to provide significant health care savings.  Right now, biosimilars have a small share of the marketplace, as only 9 biologic drug classes have approved biosimilars.  Despite this, they are currently generating $253.8 million in annual savings.

Winegarden estimates that savings from increased use of biosimilars could grow to as much as $7.2 billion annually if their marketplace share grew to 75 percent.  Even more savings would be realized if more classes of biosimilars are approved.

“Unfortunately, misguided public policies are standing in the way of the greater use of biosimilars,” said Winegarden.  “Policymakers must make reform a priority so more patients can utilize biosimilars to lead healthier lives, and more savings can be realized.”

The study also found that non-policy barriers stand in the way of the increased use of biosimilars, such as fail-first policies, which only allow patients to use a less expensive biosimilar if the more expensive biologic medication fails to work, biasing the market against biosimilars.

Another obstacle is the “buy-and-bill” method of providers purchasing medicines and then billing the payers (either an insurance company or the government).  Providers often lose money when prescribing biosimilars over the originator biologic because reimbursements are based on the sales price of the medication plus a percentage markup.

The Center for Medical Economics and Innovation at the Pacific Research Institute ( aims to educate policymakers, regulators, health care professionals, the media, and the public on the critical role that new technologies play in improving health and accelerating economic growth. 

PRI ( champions freedom, opportunity, and personal responsibility by advancing free-market policy ideas.  Follow PRI on Facebook,Twitter, and LinkedIn.